RupeePower founder takes control post share buyback from Snapdeal

Jasper Infotech is now a minority shareholder in RupeePower after founder Tejasvi Mohanram has bought back a part of Snapdeal's stake in the four-year-old company.Madhav Chanchani&Sugata Ghosh | ET Bureau | August 08, 2016, 06:30 IST

In a unique transaction in the startup space, founder of financial products platform RupeePower took back control of the company from online marketplace Snapdeal as both look to pursue independent strategy in the financial technology space.

Jasper Infotech, which owns and operates Snapdeal, is now a minority shareholder in RupeePower after founder Tejasvi Mohanram has bought back a part of Snapdeal's stake in the four-year-old company.

Snapdeal acquired a majority stake in the Gurgaon-based startup in April 2015. The move to return the control comes as Snapdeal consolidates it efforts in the financial technology space under digital payments platform and wallet Freecharge, and also closely watches spending in a tough fundraising market. RupeePower will now raise capital independently.

"Snapdeal is a minority shareholder now; the founders are in majority," said Mohanram, a former Citi and Deutsche Bank executive, when contacted by ET. "Besides Snapdeal, opportunity that we see is (working) across multiple ecommerce platforms," he said, indicating it plans to work with rivals like Flipkart too.

The terms of the transaction weren’t disclosed. Snapdeal had acquired a 60 per cent stake in RupeePower for Rs 15 crore, according to filings with the Registrar of Companies filings that ET has seen.

Weeks after taking a majority stake in RupeePower, Snapdeal also made its biggest acquisition by buying Freecharge for more than $400 million. Its focus and priority are now on the Freecharge unit.

“We periodically evaluate our portfolio investments to determine continued alignment with business needs. As part of this exercise, we have reduced our stake in RupeePower as our investment objectives in same is substantially achieved,” said a Snapdeal spokesperson.

Leaving the Snapdeal fold gives RupeePower an opportunity to address a much larger market, according to Mohanram, an IIT-Bombay and Indian School of Business alumnus. “The story for us is much larger than working with just one ecommerce players and providing loans to its customers and sellers," he said.

The company is now "looking to raise a significant round" from venture capital investors. RupeePower is an alternative credit decision-making platform, helping lenders decide about giving loans to retail and small businesses.

It claims to have helped banks disburse Rs 7,000 crore of loans till March 2016, and projects this number to increase by at least 60 per cent this year. The company is targeting categories like home loans, loans against property, credit card, personal loans, auto loans, overdraft and SME loans.

At Snapdeal, efforts to lend to consumers and sellers have now come under Freecharge, which will launch its financial products marketplace and lending platform for consumers by the end of 2016.

Freecharge took over the Capital Assist programme run by the Snapdeal marketplace earlier this month. The programme was started by Snapdeal in August 2014, with 26 banks and non-banking financial companies as partners to provide working capital loans to sellers registered on its marketplace.

RupeePower was one of the 10 acquisitions and investments done in quick succession by Snapdeal from December 2014 to September 2015. These deals were aimed at strengthening its position across key areas like fashion and logistics, besides helping the SoftBank and Alibaba-backed company diversify into new areas like online services and grocery delivery.

While some of the deals like Freecharge, where Snapdeal is also raising capital independently, have done well for the company, several others have struggled. Management of GoJavas, the logistics firm where Snapdeal invested more than Rs 250 crore, has been under the scanner for financial irregularities, while grocery startup PepperTap pivoted to a logistics technology company.